Madison — A Wausau man pleaded guilty Nov. 25 in federal court to defrauding Peoples State Bank possibly out of millions of dollars by forging documents to inflate the value of the corn and soybeans his elevators stored.
Douglas Weinkauf, 63, owned Wisconsin Rapids Grain, LLC, which operated three warehouses in the state including one in Brokaw. Rapids Grain had lines of credit and loans with Peoples State, River Valley Bank and FirstMerit Bank and pledged real estate and quantities of grain as collateral for the loans.
In early 2009, Weinkauf received a line of credit from Peoples State Bank to buy corn and soybeans and was to repay amounts he borrowed when the stored crops were sold, Assistant U.S. Attorney Tim O’Shea said.
As a federally licensed warehouse, Weinkauf was required to report weekly to the U.S. Department of Agriculture the amounts of grain on hand. Banks relied on the reports as a measure of their debtor’s financial solvency.
An audit of Wisconsin Rapids Grain in August 2013 revealed that between what Weinkauf reported on warehouse receipts and the actual amount of grain on hand was a 350,000 bushel deficit of soybeans, a 25,000 bushel deficit of wheat and a 2 million bushel deficit of corn, O’Shea said.
“Wisconsin Rapids Grain was able to cover the growing deficits by (phony) warehouse receipts,” O’Shea told District Judge William Conley.
The company, which sold grain as Ruby Grain, LLC, ceased operations in August 2013, owing Peoples State Bank $4 million, O’Shea said.
Weinkauf’s attorney, Marcus Berghahn, did not dispute O’Shea’s statements.
Weinkauf told Conley that he created the false warehouse receipts and did so knowing he was defrauding the bank.
He is required to make restitution to the three banks. O’Shea said that amount has not yet been determined. If Weinkauf and the banks cannot agree on the amount, Conley can set it at Weinkauf’s March 9 sentencing when he faces maximum penalties of 30 years in prison, a $1 million fine and five years’ supervised release.
The grain company's troubles became public in fall 2013, when 13 corn growers not paid by Weinkauf submitted claims totaling $75,000 to the Wisconsin Department of Agriculture, Trade and Consumer Protection for reimbursement under a producer’s security program, according to the agency.
Also at this time, FirstMerit Bank filed a civil lawsuit against Douglas and Dixie Weinkauf seeking repayment of a $4.96 million loan. The bank obtained $1.263 million from Wisconsin Rapids Grain's liquidated assets in April 2014 and obtained a judgment for the outstanding principal, interest and late payments Weinkauf owed, according to documents filed in federal court.